Networks diss iTunes rentals, embrace Netflix instant streaming

Several media executives have criticized the pricing for Apple's iTunes TV …

The new Apple TV has been delayed into October, but Apple has already rolled out its new iTunes TV show rental service with the iTunes 10 update. Disney/ABC and Fox are on board with the new 99¢ TV episode rental service while other broadcast and cable networks have criticized the service, leery of "devaluing" their content with low prices. Yet some of those same networks are willing to offer their content via Netflix instant streaming for fixed fees.

During a Goldman Sachs investor conference in New York this week, a number of media executives expressed concern that Apple's 99¢ price point is too low. "The 99¢ rental is not a good price point," Viacom CEO Philippe Dauman said. "It doesn't work for us." Viacom operates several cable networks, such as MTV, Comedy Central, and Nickelodeon.

CBS's Les Moonves was more diplomatic, saying the company was taking a wait-and-see approach to the new service. But NBC's Jeff Zucker, already an outspoken critic of Apple's pricing structure for iTunes, suggested the 99¢ price "devalues" its content.

Netflix subscribers pay as little as $8.99 per month to access the complete library of streaming options. A source told Ars that Netflix typically offers a flat fee for a license to stream content for a limited time period, and the company doesn't share viewer metrics, such as how many times a movie or TV show have been viewed, with content providers.

In contrast, content providers get a percentage of the 99¢ rental every time a viewer watches a TV episode. While detailed demographic information may not be available from Apple, at the very least content providers can keep track of exactly how many viewers are watching via iTunes rentals. And the more viewers watch, the more money content providers earn.

It's hard to understand why iTunes rentals "devalue" content while instant, unlimited, on-demand access for the price of nine iTunes TV rentals is so great that NBC/Universal's Frances Manfredi "applauded" the deal it reached with Netflix.

Content providers seem content to repeat the mistakes that plagued the music industry during the last two decades, as they tenuously fought to maintain traditional business models in the face of sweeping technological change. Consumers are increasingly looking to replace expensive cable subscriptions with lower-cost options like Netflix and Hulu+, and the Wall Street Journal noted that the cable industry suffered its first-ever decline in subscribers last quarter. Clearly consumers aren't interested in waiting for media execs to get their act together.

Ultimately, Apple TV users will be able to access the content anyway, since it now includes Netflix streaming. Perhaps Zucker and his peers should consider heeding the words of Disney chief Bob Iger. "We made a decision five years ago that we would be much better off aligning with technology companies than fighting them," he said during a conference. "We concluded then—and we would reach the same conclusion today—that you can't will technology away. It is real. It's here."